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Colorado top issuer of drilling permits

5,159 in '09 was
more than Wyo.

Despite concerns about the impact of its new oil and gas rules, Colorado approved more drilling permits last year than surrounding states.

Colorado issued 5,159 drilling permits last year, down from a record 8,027 in 2008. However, it still approved more than neighboring states, edging out Wyoming, which issued 5,106, according to information prepared by the Colorado Oil and Gas Conservation Commission for the Colorado legislature’s Joint Budget Committee.

Also, 1,487 wells were drilled in the state last year through Dec. 23, exceeding second-place Wyoming’s 896 in a comparison of Rocky Mountain states by Anderson Reports Inc.

In a presentation to the oil and gas commission Monday, commission Director Dave Neslin also pointed to a report by IHS Inc. that showed Colorado issuing 1,273 permits, not including refiled permits, for the second half of the year. That compared to 825 for Wyoming, which posted the second-highest amount in the region.

“That suggests the rules are not having a negative effect on permitting,” Neslin said.

The state’s new, stricter rules started taking effect in April. Critics said they contributed to the state’s drilling decline last year. State officials say falling energy prices were to blame.

Neslin also is encouraged by rising permit activity in Colorado every month since September. Both applications and permits issued in December exceeded levels in December 2007, Neslin noted. However, they remained behind levels in December 2008.

While Garfield County led the state in permits issued last year, at 1,981, Neslin said the most active drilling area in the state in recent months has been the Denver Julesburg Basin. Wells there produce more oil and liquid condensates than in western Colorado’s Piceance Basin, and those products are getting a better price than natural gas, Neslin said.

However, he said recent months have brought a dramatic increase in permitting activity in the Piceance Basin, with the area accounting for about half of the permits recently issued in the state. But that has yet to translate into a comparable increase in drilling, he said.

Meanwhile, Neslin also is proud that his agency has cut its permitting backlog from 2,000 eight months ago to about 600. Permit processing times averaged below 40 days in October and November, about half what they were in May and June.

Tisha Conoly Schuller, president of the Colorado Oil & Gas Association, said in a written statement the industry is encouraged by the attention the state is giving to improving permit approval times.

“Efficient permit review remains a priority for the recovery of the natural gas industry,” she said.

Neslin said one factor in the improvement is the new rules. They provide environmental review of well pad locations, eliminating the need to conduct such review for each of the numerous wells that can be drilled from each pad.